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It’s a horrendous vicious cycle. Major corporations, including banks, have the largest cash reserves on record waiting for an economic upturn to happen that will never occur if they don’t spend the money they’re hoarding to hire people and lend to homeowners and small businesses.

It is a self-defeating psychology. Absent the political leadership that could potentially inspire business leaders to do what’s right, not only for the American people, but for the health of their own businesses- the cycle may wipe us out.

In the U.S., the efforts have been half-hearted. On December 14, 2009, President Obama called the leaders of the American banking industry into the oval office for what was billed as a good old-fashioned visit to the woodshed. I blogged about it here that day. What became of it? Absolutely nothing.

All the right words were said. The President lectured the banking leaders that it was their responsibility to give back to the American taxpayers who bailed them out of the problems the banks themselves caused back when they were lending money like drunken sailors and creating phony and creaky investment instruments that brought the American economy to the brink of another great depression.

The bankers left the oval office after having their tea and cookies and proceeded to continue not lending, to hoard cash, and to help build up those liquid reserves by nickel and diming their poor and increasingly jobless customers with invented fees and skyrocketing overdraft charges.

It’s hard to overstate the importance of banks in our current economic situation. They lend money to small businesses who hire about 60% of the American work force…and they are not writing loans. The housing market has now entered its second recession because homebuyers with good credit and sterling backgrounds are being turned down by banks. So-called lending institutions have gone from predatory practices and inflating people’s financial assets and salaries to denying loans to families with solid credit scores and legitimate stability.

It’s not all banks. Major non-financial corporations are stashing money under the mattress too. They are not investing in new tools or products or hiring people. And if you’ve checked out interest rates lately—they’re practically at zero. Corporations are not exactly getting a good return on all the cash they’re hoarding these days. It’s a stupid strategy.

The time to start lending and investing and hiring is NOW. There is no greater bully pulpit in the world than the oval office and it’s high time the President exercised leadership and used some of that vaunted soaring oratory that got him elected in the first place to charm, cajole and otherwise inspire America’s business leaders into doing what’s right for their country, and in the end, what’s good for their own bottom lines.

I heard the new populist version of President Obama at a Town Hall meeting in Ohio today. I remember this guy. Looks amazingly similar to a fellow I saw campaigning about a year and half ago. Just might work. He’s a very attractive candidate.

One favor though, Mr. President. Is there any chance you could give these fiery anti-Wall Street speeches sometime after 4pm, ET?

You see, everytime CNBC shows you talking about sticking it to the banks, those crazy guys on the floor of the New York stock exchange put in sell orders. Lots and lots of sell orders. The market has now lost 400 points in two days and it seems to coincide precisely to those moments you’re speaking live on cable TV.

They’re finally getting called to the woodshed. The heads of American Express, Bank of America, Capital One, Goldman Sachs, Citigroup, JPMorgan, Morgan Stanley, and Wells Fargo meet with President Obama today at the White House. It occurs to me that this is not all that dissimilar to something that occurred 47 years ago when John F. Kennedy when toe-to-toe with Big Steel. Sometimes the power of the Presidency can do wonders to reign in greed.

Back then, of course, it was a different world. Steel prices were a very big deal because the nation was still in post-World War II expansion and steel was the key behind the development of the interstate highway system, the auto and airline industries and the growth of the housing industry, then in the process of building America’s great suburbs.

In a nutshell, the Kennedy Administration had spent a great deal of time and effort mediating a major dispute between the steel industry and its labor unions in an effort to hold down the costs of steel. The Labor Secretary of the time, Arthur Goldberg, used his considerable influence with labor to help hammer out a deal in which there were no wage hikes and only modest increases in fringe benefits.

Three days later, the major steel producers announced a 3.5% across-the-board increase in prices. It was a slap in the face to the White House- as if to say “government has no role to play in the private sector, stay out of our business.” And of course, they had just benefited from the government’s intervention in their own labor problems to hold down the cost of union contracts. Do you see an analogy building here?

The U.S. saves the banking sector by offering huge tax-payer bail-outs and how do they respond? Just like Big Steel did in 1962. Only in this case the slap in the face wasn’t a mere price increase. Banks got intensely tight-fisted with their lending. They hiked interest rates on credit cards to loan-shark levels. While the nation’s unemployment rate spiked above 10%, thanks to government bail-outs, they prospered and Wall Street went right back to handing out huge bonuses.

Here’s what Kennedy did when he took on the steel industry:

1) The Justice department swung into action and announced it was investigating possible price-fixing.

2) The Pentagon announced it would enter into contracts only with steel companies that had bucked U.S. Steel and other big companies and kept their prices low.

3) The President held a news conference to explain why the steel companies were not acting in the public interest.

“The pubic interest.” Now that’s an interesting phrase. It implies that hand-in-hand with the raw and necessary capitalistic impulses of making profits, there might also be a sense of responsibility to the nation. Big Steel capitulated in less than a week and rolled back the price increases.

Likewise, the message is beginning to seep through to Big Banking. Even they are beginning to sense how disconnected they are from their customers. On 60 Minutes Sunday night, President Obama did the equivalent of JFK’s Big Steel news conference.

I did not run for office to be helping out a bunch of fat cat bankers on Wall Street. They don’t get it. They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down ten million, twenty million dollar bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.

Well, what do you know? Politico.com is reporting this morning that banking leaders will tell the President today that they are ready to “step up.”

Every CEO that’s participating is ready to a) listen and b) step up,” said an industry executive familiar with plans for the meeting. Everybody’s goal is to come out of the meeting with actionable, constructive and measurable things that the industry can do to spur recovery.

The bankers do make a legitimate case that they cannot return to the crazy drunken lending they offered to unqualified subprime mortgage customers that helped screw the economy in the first place. But, surely, even they have to realize the difference between that kind of lending and, say, small business loans. There will always be risk. But some kinds are manageable and some kinds are not.

Let’s hope they’re smart enough to figure out the difference and that the White House and the little people continue to hold their feet to the fire. Our jobs and our way of life are dependent on it.